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Judge clears PREPA to assume green power purchase contracts


U.S. District Court Judge Laura Taylor Swain

By The Star Staff


Judge Laura Taylor Swain, who is presiding over Puerto Rico’s Title III bankruptcy cases, has allowed the Puerto Rico Electric Power Authority (PREPA) to assume power purchase contracts that will pave the way for the construction of facilities slated to provide some 150 megawatts of renewable energy.


PREPA has been in bankruptcy since 2017 in the Title III bankruptcy court created by the federal Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) to restructure some $9 billion in debt.


In an order dated Dec. 8, Swain allowed PREPA to assume power purchase agreements (PPOAs) with Xzerta Tec and with CIRO One, dismissing objections from Windmar Energy, which objected to the agreements at a hearing on Oct. 6.


“Having carefully considered all of the submissions and arguments made in connection with the Notices, the Court overrules the Windmar Objection and approves the assumption of the Contracts,” the judge said. “The Oversight Board, as representative of PREPA, has described the Contracts and amendments to be assumed, demonstrating that their terms are favorable to PREPA.”


The contracts have been objected to separately by the Association of Renewable Energy Producers (APER by its Spanish acronym) in San Juan Superior Court earlier this year, citing lack of transparency in the selection process.


In federal court, the sole objector to the assumption of the contracts was Windmar. The basis of the Windmar objection is that the contracts are allegedly noncompliant with Puerto Rico law, specifically the Puerto Rico Energy Policy Act. Windmar asserts that the contracts’ provision for flat-rate bundled pricing of renewable energy certificates and renewable energy delivery violates energy policy, which, according to Windmar, requires the prices of the Renewable Energy Certificates and the price of energy be stated separately in the power purchase agreements.


The oversight board, representing PREPA, argued that the objection had to be overruled because Windmar did not demonstrate that it is a party-in-interest with standing to assert an objection to the contracts.


The Bankruptcy Code defines the term party-in-interest to “include the debtor, the trustee, a creditors’ committee, an equity security holders’ committee, a creditor, an equity security holder, or any indenture trustee,” Swain said.


“While Windmar is an unsecured creditor of the debtor, Windmar does not allege that PREPA’s assumption of the Contracts will cause it to suffer any harm (including infringement of a right) in its capacity as a creditor. Rather, Windmar argues that PREPA is hindering competition in the market in general,” the judge said. “Windmar’s failure to demonstrate that it has any particularized relationship to the Contracts, or that it will suffer a particular harm as a creditor if the PPOAs are assumed, is fatal to Windmar’s attempt to establish that it has standing to object.”

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